US Court Strikes Down Trump's Tariffs
The United States Court of International Trade recently invalidated President Donald Trump's 10% global tariffs, which were imposed under Section 122 of the Trade Act of 1974. This decision came less than 50 days after the tariffs' introduction on February 20. The ruling may create additional uncertainty around US tariffs, potentially affecting the Bilateral Trade Agreement (BTA) between India and the US.
Background of Tariffs
- Section 122 permits the president to levy import tariffs up to 15% for a maximum of 150 days to address serious balance-of-payments difficulties without congressional approval.
- The Trump administration claimed there was a serious balance-of-payments deficit, citing a $1.2 trillion annual US goods trade deficit and a current account deficit of 4% of GDP.
Court Decision
- A divided three-judge panel, in a 2-1 decision, vacated the tariffs following a request by small businesses and Democrat-led states.
- The court found that the tariffs were not an appropriate response to the trade deficits cited by Trump.
- Trump criticized the decision, blaming "two radical left judges" and expressed intent to find alternative solutions.
Implications for India-US Trade
- Ajay Srivastava from Global Trade Research Initiative (GTRI) advised India to wait for a stable US trade system before finalizing the BTA.
- Current US tariff policy uncertainties make long-term trade commitments challenging for India.
- The US is not prepared to reduce its Most-Favoured-Nation (MFN) tariffs, making potential trade deals one-sided.
Progress in Trade Negotiations
Following a four-day visit to Washington DC, led by India’s chief trade negotiator Darpan Jain, India’s commerce department reported progress in finalizing an interim trade agreement and advancing broader BTA negotiations. Discussions focused on market access, non-tariff measures, technical trade barriers, customs facilitation, investment promotion, and digital trade.
